Arabs pay £345m for Berkeley Sq

AN ARAB consortium led by the Saudi Arabian royal family has bought London's Berkeley Square in a £345m deal from BP's pension fund, which bought the square in 1967 for £12m.

The purchase of 10 acres includes 100 buildings that house some of London's oldest firms, including gunsmith Holland & Holland. The freehold of two upmarket clubs, Annabels and the Clermont Club, is also included.

The mythical nightingale made famous in Dame Vera Lynn's wartime song will also become a resident of the Arabs as Berkeley Square itself is included in the portfolio, as are nearby properties in Bruton Place, Bruton Street, Hays Hill Street and Charles Street.

Fronting the operation on behalf of the Arabs is Capital Trust, whose offices in Mount Street are part of the purchase. Investors in the deal include Saudia Arabian billionaire Prince Alwaleed Bin Talal Bin Abdul Aziz. Last January this nephew of Saudi Arabia's King Fahd sold his 6% stake in Canary Wharf for £122m.

Other super-rich Saudi investors joined the bid anonymously, pushing the price well out of the reach of other bidders.

Insiders say that the Duke of Westminster's Grosvenor Estates was the underbidder with an offer of £335m. But Britain's richest man could not match the Arabs' resources.

The Saudi Arabians were keen to add to the £120m worth of other Berkeley Street property they bought from BP's pension fund in 1997 in a secret deal. The Saudis also own other property in the capital worth about £130m, but were anxious to gain prestige by becoming Mayfair's biggest property owners.

Property experts believe the estate, although prestigious, is beset by the problem of all its buildings being listed. Modernisation would be virtually impossible. Some properties yield as little as 4%.

Marketing of the estate has been carried out by CB Hillier Parker. Richard Womack, director of West End investment at the property agent, refused to confirm the sale. He said: 'There is a Press embargo agreed by all parties. As soon as contracts are exchanged we will make a statement.'

Property insiders said CBHP has negotiated a £1m-a-year deal to manage the properties. CBHP was surprised by the interest in properties it thought worth only £310m. Competition included Grosvenor, British Land and Dubai's Crown Prince.